East West Bancorp, Inc. (“East West” or the “Company”) (Nasdaq:
EWBC), parent company of East West Bank, reported its financial
results for the third quarter of 2022. Third quarter 2022 net
income was $295.3 million, or $2.08 per diluted share; diluted
earnings per share grew 58% linked quarter annualized and 32%
year-over-year.
“This was another quarter of outstanding results. Net interest
income increased to a record $552 million, up 66% linked quarter
annualized, and our net interest margin expanded an impressive 45
basis points quarter-over-quarter to 3.68%,” stated Dominic Ng,
Chairman and Chief Executive Officer of East West. “Our efficiency
improved, expanding all profitability ratios. For the third quarter
of 2022, we returned 1.9% on average assets and 20.3% on average
equity.”
“Total loans reached a record $47.5 billion as of September 30,
2022, up 8% linked quarter annualized, with growth across all our
major loan categories. Asset quality continued to be healthy, with
very low charge-offs and criticized loans decreasing 11% from June
30, 2022.”
“All our capital ratios expanded in the third quarter of 2022,
driven by the strength of our earnings growth. We ended the quarter
with a common equity tier 1 ratio of 12.3% and a tangible common
equity ratio1 of 8.35%,” continued Ng.
“With our industry-leading operating margins and strong capital,
we are well positioned to navigate the changing economic
conditions, and help our customers prosper and maximize personal
and business opportunities. We are looking forward to finishing
2022 on a high note and entering 2023 with strength and
confidence,” concluded Ng.
FINANCIAL HIGHLIGHTS
Three Months Ended
Qtr-o-Qtr Change
Yr-o-Yr Change
($ in millions, except per share data)
September 30, 2022
$
%
$
%
Total Loans
$
47,457
$
926
2
%
$
6,975
17
%
Total Deposits
53,857
(486
)
(1
)
501
1
Total Revenue
$
627
$
76
14
%
$
159
34
%
Adj. Pre-tax Pre-provision Income2
432
62
17
130
43
Net Income
295
37
14
70
31
Diluted Earnings per Share
$
2.08
$
0.27
15
%
$
0.50
32
%
____________________
1
See reconciliation of GAAP to non-GAAP
financial measures in Table 13.
2
See reconciliation of GAAP to non-GAAP
financial measures in Table 12.
BALANCE SHEET
- Record Assets – Total assets reached $62.6 billion as of
September 30, 2022, up $181.8 million, or 0.3% (1% annualized),
from $62.4 billion as of June 30, 2022. Year-over-year, total
assets grew $1.6 billion, or 3%, from $61.0 billion as of September
30, 2021. Third quarter 2022 average interest-earning assets of
$59.5 billion were up $810.0 million, or 1% (5% annualized), from
$58.7 billion in the second quarter of 2022. Quarter-over-quarter,
average loan growth of $2.2 billion was partially offset by
declines in other, lower yielding interest-earning assets.
- Record Loans – Total loans reached $47.5 billion as of
September 30, 2022, an increase of $926.2 million, or 2% (8%
annualized), from $46.5 billion as of June 30, 2022.
Year-over-year, total loans grew $7.0 billion, or 17%, from $40.5
billion as of September 30, 2021. Third quarter 2022 average loans
of $46.9 billion grew $2.2 billion, or 5% (20% linked quarter
annualized), with solid growth spread across all our major loan
categories, led by residential mortgage and commercial real estate
loans.
- Total Deposits – Total deposits were $53.9 billion as of
September 30, 2022, a decrease of $0.5 billion, or 1% (4%
annualized), from $54.3 billion as of June 30, 2022.
Year-over-year, deposits grew $0.5 billion, or 1%, from $53.4
billion as of September 30, 2021. Third quarter 2022 average
deposits of $54.1 billion decreased $78.3 million, essentially
unchanged from the second quarter. Quarter-over-quarter, growth in
average time deposits, interest-bearing checking and money market
accounts was offset by a decrease in average noninterest-bearing
demand deposits. Average noninterest-bearing deposits made up 41%
of average total deposits in the third quarter of 2022, compared
with 44% in the second quarter of 2022 and 43% in the third quarter
of 2021.
- Strong Capital Levels – As of September 30, 2022,
stockholders’ equity was $5.7 billion, or $40.17 per common share,
and tangible equity3 per common share was $36.80; each increasing
1% (4% annualized) quarter-over-quarter. As of September 30, 2022,
the tangible equity to tangible assets ratio was 8.35%, an increase
of six basis points quarter-over-quarter. The common equity tier 1
(“CET1”) capital ratio was 12.3%, and the total risk-based capital
ratio was 13.6% as of September 30, 2022.
____________________
3
See reconciliation of GAAP to non-GAAP
financial measures in Table 13.
OPERATING RESULTS
Third Quarter Earnings – Third quarter 2022 net income
was $295.3 million, an increase of 14%, or 57% annualized, from
$258.3 million for the second quarter of 2022, and an increase of
31% from $225.4 million for the third quarter of 2021. Third
quarter 2022 diluted earnings per share were $2.08, an increase of
15%, or 58% annualized, from $1.81 per diluted share for the second
quarter 2022, and an increase of 32% from $1.57 per diluted share
for the year-ago quarter.
Third Quarter 2022 Compared to Second
Quarter 2022
Net Interest Income and Net Interest Margin
Record net interest income (“NII”) totaled $551.8 million, an
increase of 17%, or 66% annualized, from $473.0 million. Net
interest margin (“NIM”) of 3.68% expanded 45 basis points from
3.23%.
- NII growth and NIM expansion were driven by expanding earning
asset yields and loan growth, partially offset by an increase in
the cost of funds.
- The average loan yield was 4.75%, up 80 basis points from the
second quarter. The average interest-earning asset yield was 4.19%,
up 77 basis points from the second quarter. Average loans made up
79% of average interest-earning assets in the third quarter of
2022, compared with 76% in the second quarter of 2022.
- The average cost of funds was 0.55%, up 35 basis points from
the second quarter. The average cost of deposits was 0.51%, up 34
basis points, and the average cost of interest-bearing deposits was
0.86%, up 56 basis points from the second quarter.
- The changes in yields and rates reflected rising benchmark
interest rates.
Noninterest Income
Noninterest income totaled $75.6 million in the third quarter, a
decrease of $2.9 million, or 4%, from $78.4 million in the second
quarter.
- Fee income and net gains on sales of loans were $69.0 million,
an increase of $4.2 million, or 7% (26% annualized), from $64.8
million in the second quarter. Growth in wealth management fees,
deposit account fees and gains on sale of SBA loans was partially
offset by decreased foreign exchange income.
Noninterest Expense
Noninterest expense totaled $216.0 million in the third quarter,
compared with $196.9 million in the second quarter. Third quarter
noninterest expense consisted of $195.6 million of adjusted
noninterest expense4, $19.9 million in amortization of tax credit
and other investments, and $0.5 million in amortization of core
deposit intangibles.
- Adjusted noninterest expense of $195.6 million increased $14.2
million, or 8%, from $181.4 million in the second quarter, driven
by higher compensation and employee benefits.
- Amortization of tax credit and other investments totaled $19.9
million in the third quarter, compared with $15.0 million in the
second quarter. Quarter-over-quarter variability in the
amortization of tax credits and other investments partially
reflects the impact of investments that close in a given
period.
- The adjusted efficiency ratio4 was 31.2% in the third quarter,
compared with 32.9% in the second quarter.
____________________
4
See reconciliation of GAAP to non-GAAP
financial measures in Table 12.
TAX RELATED ITEMS
Third quarter 2022 income tax expense was $89.0 million compared
with income tax expense of $82.7 million for the second quarter of
2022. The year-to-date effective tax rate for the first nine months
of 2022 was 22.7%.
ASSET QUALITY
The asset quality of our loan portfolio continued to be solid
and stable.
- Criticized loans decreased $117.4 million, or 11%,
quarter-over-quarter to $905.2 million as of September 30, 2022,
down from $1,022.6 million as of June 30, 2022. Special mention
loans decreased 20% quarter-over-quarter to $471.0 million, and
classified loans were essentially unchanged at $434.2 million.
- The criticized loans ratio decreased 29 basis points
quarter-over-quarter to 1.91% of loans held-for-investment (“HFI”)
as of September 30, 2022, down from 2.20% as of June 30, 2022. The
special mention loans ratio decreased 28 basis points
quarter-over-quarter to 0.99%, and the classified loans ratio
decreased one basis point to 0.92%.
- As of September 30, 2022, nonperforming assets were $97.0
million, or 0.16% of total assets, compared with $89.9 million, or
0.14% of total assets, as of June 30, 2022.
- Third quarter 2022 net charge-offs were $6.6 million, or
annualized 0.06% of average loans HFI, compared with net recoveries
of $6.6 million, or annualized 0.06% of average loans HFI, for the
second quarter of 2022.
- The allowance for loan losses totaled $582.5 million, or 1.23%
of loans HFI, as of September 30, 2022, compared with $563.3
million, or 1.21% of loans HFI, as of June 30, 2022. The
quarter-over-quarter build in the allowance coverage largely
reflects the current macroeconomic outlook and loan growth during
the quarter.
Provision for credit losses was $27.0 million for the third
quarter of 2022, compared with $13.5 million for the second quarter
of 2022.
CAPITAL STRENGTH
Capital levels for East West are strong. The following table
presents the regulatory capital metrics as of September 30, 2022,
June 30, 2022 and September 30, 2021.
EWBC Risk-Based Capital Ratios
($ in millions)
September 30, 2022 (a)
June 30, 2022 (a)
September 30, 2021 (a)
CET1 capital ratio
12.3
%
12.0
%
12.8
%
Tier 1 capital ratio
12.3
%
12.0
%
12.8
%
Total capital ratio
13.6
%
13.2
%
14.2
%
Leverage ratio
9.6
%
9.3
%
8.8
%
Risk-Weighted Assets (“RWA”) (b)
$
49,254
$
48,499
$
42,128
(a)
The Company has elected to use the 2020
CECL transition provision in the calculation of its September 30,
2022, June 30, 2022 and September 30, 2021 regulatory capital
ratios. The Company’s September 30, 2022 regulatory capital ratios
and RWA are preliminary.
(b)
Under regulatory guidelines, on-balance
sheet assets and credit equivalent amounts of derivatives and
off-balance sheet items are assigned to one of several broad risk
categories based on the nature of the obligor, or, if relevant, the
guarantor or the nature of any collateral. The aggregate dollar
value in each risk category is then multiplied by the risk weight
associated with that category. The resulting weighted values from
each of the risk categories are aggregated for determining total
RWA.
DIVIDEND PAYOUT AND CAPITAL ACTIONS
East West’s Board of Directors has declared fourth quarter 2022
dividends for the Company’s common stock. The common stock cash
dividend of $0.40 per share is payable on November 15, 2022, to
stockholders of record on November 1, 2022.
On March 3, 2020, East West’s Board of Directors authorized the
repurchase of up to $500 million of East West’s common stock, of
which $254 million remains available. East West did not repurchase
any shares during the third quarter of 2022.
Conference Call
East West will host a conference call to discuss third quarter
2022 earnings with the public on Thursday, October 20, 2022, at
8:30 a.m. PT/11:30 a.m. ET. The public and investment community are
invited to listen as management discusses third quarter 2022
results and operating developments.
- The following dial-in information is provided for participation
in the conference call: calls within the U.S. – (877) 506-6399;
calls within Canada – (855) 669-9657; international calls – (412)
902-6699.
- A presentation to accompany the earnings call will be available
on the Investor Relations page of the Company’s website at
www.eastwestbank.com/investors.
- A listen-only live broadcast of the call will also be available
on the Investor Relations page of the Company’s website at
www.eastwestbank.com/investors.
- A replay of the conference call will be available on October
20, 2022, at 11:30 a.m. PT/2:30 p.m. ET through November 20, 2022.
The replay numbers are: within the U.S. – (877) 344-7529; within
Canada – (855) 669-9658; international calls – (412) 317-0088; and
the replay access code is: 3874614.
About East West
East West Bancorp, Inc. is a public company with total assets of
$62.6 billion and is traded on the Nasdaq Global Select Market
under the symbol “EWBC”. The Company’s wholly-owned subsidiary,
East West Bank, is the largest independent bank headquartered in
Southern California, operating over 120 locations in the United
States and in China. The Company’s markets in the United States
include California, Georgia, Illinois, Massachusetts, Nevada, New
York, Texas and Washington. In China, East West’s presence includes
full-service branches in Hong Kong, Shanghai, Shantou and Shenzhen,
and representative offices in Beijing, Chongqing, Guangzhou, and
Xiamen. For more information on East West, visit the Company’s
website at www.eastwestbank.com.
Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto)
contain forward-looking statements that are intended to be covered
by the safe harbor for such statements provided by the Private
Securities Litigation Reform Act of 1995. In addition, the Company
may make forward-looking statements in other documents that it
files with, or furnishes to, the U.S. Securities and Exchange
Commission (“SEC”) and management may make forward-looking
statements to analysts, investors, media members and others.
Forward-looking statements are those that do not relate to
historical facts, and that are based on current expectations,
estimates and projections about the Company’s industry,
management’s beliefs and certain assumptions made by management,
many of which, by their nature, are inherently uncertain and beyond
the Company’s control. These statements may relate to the Company’s
financial condition, results of operations, plans, objectives,
future performance and/or business and usually can be identified by
the use of forward-looking language, such as “anticipates,”
“assumes,” “believes,” “can,” “continues,” “could,” “estimates,”
“expects,” “forecasts,” “goal,” “intends,” “likely,” “may,”
“might,” “objective,” “plans,” “potential,” “projects,” “remains,”
“should,” “target,” “trend,” “will,” “would,” or similar
expressions, and the negative thereof. You should not place undue
reliance on these statements, as they are subject to risks and
uncertainties, including, but not limited to, those described
below. When considering these forward-looking statements, you
should keep in mind these risks and uncertainties, as well as any
cautionary statements the Company may make. Moreover, you should
treat these statements as speaking only as of the date they are
made and based only on information then actually known to the
Company.
There are a number of important factors that could cause future
results to differ materially from historical performance and any
forward-looking statements. Factors that might cause such
differences, include, but are not limited to: changes in the global
economy, including an economic slowdown, market or supply chain
disruption, level of inflation, interest rate environment, housing
prices, employment levels, rate of growth and general business
conditions; the impact of any future federal government shutdown
and uncertainty regarding the federal government’s debt limit;
changes in local, regional and global business, economic and
political conditions and geopolitical events; the economic,
financial, reputational and other impacts of the ongoing
Coronavirus Disease 2019 (“COVID-19”) pandemic, including variants
thereof, and any other pandemic, epidemic or health-related crisis,
as well as a deterioration of asset quality and an increase in
credit losses due to the COVID-19 pandemic; changes in laws or the
regulatory environment including regulatory reform initiatives and
policies of the U.S. Department of the Treasury, the Board of
Governors of the Federal Reserve System (“Federal Reserve”), the
Federal Deposit Insurance Corporation, the Office of the
Comptroller of the Currency, the SEC, the Consumer Financial
Protection Bureau, and the California Department of Financial
Protection and Innovation – Division of Financial Institutions;
changes and effects thereof in trade, monetary and fiscal policies
and laws, including the ongoing economic and political disputes
between the U.S. and the People’s Republic of China and the
monetary policies of the Federal Reserve; changes in the commercial
and consumer real estate markets; changes in consumer or commercial
spending, savings and borrowing habits, and patterns and behaviors;
fluctuations in the Company’s stock price; the impact from
potential changes to income tax laws and regulations, federal
spending and economic stimulus programs; the Company’s ability to
compete effectively against financial institutions in its banking
markets and other entities, including as a result of emerging
technologies; the soundness of other financial institutions; the
success and timing of the Company’s business strategies; the
Company’s ability to retain key officers and employees; impact on
the Company’s funding costs, net interest income and net interest
margin from changes in key variable market interest rates,
competition, regulatory requirements and the Company’s product mix;
changes in the Company’s costs of operation, compliance and
expansion; the Company’s ability to adopt and successfully
integrate new technologies into its business in a strategic manner;
the impact of the benchmark interest rate reform in the U.S.
including the transition away from the U.S. dollar (“USD”) London
Interbank Offered Rate (“LIBOR”) to alternative reference rates;
the impact of communications or technology disruption, failure in,
or breach of, the Company’s operational or security systems or
infrastructure, or those of third party vendors with which the
Company does business, including as a result of cyber-attacks; and
other similar matters which could result in, among other things,
confidential and/or proprietary information being disclosed or
misused, and materially impact the Company’s ability to provide
services to its clients; the adequacy of the Company’s risk
management framework, disclosure controls and procedures and
internal control over financial reporting; future credit quality
and performance, including the Company’s expectations regarding
future credit losses and allowance levels; the impact of adverse
changes to the Company’s credit ratings from major credit rating
agencies; impact of adverse judgments or settlements in litigation;
the impact on the Company’s operations due to political
developments, pandemics, wars, civil unrest, terrorism or other
hostilities that may disrupt or increase volatility in securities
or otherwise affect business and economic conditions; heightened
regulatory and governmental oversight and scrutiny of the Company’s
business practices, including dealings with consumers; the impact
of reputational risk from negative publicity, fines, penalties and
other negative consequences from regulatory violations, legal
actions and the Company’s interactions with business partners,
counterparties, service providers and other third parties; the
impact of regulatory investigations and enforcement actions;
changes in accounting standards as may be required by the Financial
Accounting Standards Board or other regulatory agencies and their
impact on critical accounting policies and assumptions; the
Company’s capital requirements and its ability to generate capital
internally or raise capital on favorable terms; the impact on the
Company’s liquidity due to changes in the Company’s ability to
receive dividends from its subsidiaries; any future strategic
acquisitions or divestitures; changes in the equity and debt
securities markets; fluctuations in foreign currency exchange
rates; the impact of increased focus on social, environmental and
sustainability matters, which may affect the Company’s operations
as well as those of its customers and the economy more broadly;
significant turbulence or disruption in the capital or financial
markets, which could result in, among other things, reduced
investor demand for loans, a reduction in the availability of
funding or increases in funding costs, declines in asset values
and/or recognition of allowance for credit losses on securities
held in the Company’s debt securities and equity securities
portfolio; and the impact of climate change, natural or man-made
disasters or calamities, such as wildfires, droughts and
earthquakes, all of which are particularly common in California, or
other events that may directly or indirectly result in a negative
impact on the Company’s financial performance.
For a more detailed discussion of some of the factors that might
cause such differences, see the Company’s Annual Report on Form
10-K for the year ended December 31, 2021 under the heading Item
1A. Risk Factors and the information set forth under Item 1A. Risk
Factors in the Company’s Quarterly Reports on Form 10-Q. The
Company does not undertake, and specifically disclaims any
obligation to update or revise any forward-looking statements to
reflect the occurrence of events or circumstances after the date of
such statements except as required by law.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEET
($ and shares in thousands,
except per share data)
(unaudited)
Table 1
September 30, 2022 % or
Basis Point Change
September 30, 2022
June 30, 2022
September 30, 2021
Qtr-o-Qtr
Yr-o-Yr
Assets
Cash and due from banks
$
554,260
$
688,936
$
594,631
(19.5
)%
(6.8
)%
Interest-bearing cash with banks
1,609,093
1,213,117
4,258,270
32.6
(62.2
)
Cash and cash equivalents
2,163,353
1,902,053
4,852,901
13.7
(55.4
)
Interest-bearing deposits with banks
630,543
712,709
855,162
(11.5
)
(26.3
)
Assets purchased under resale agreements
(“resale agreements”)
892,986
1,422,794
2,596,142
(37.2
)
(65.6
)
Available-for-sale (“AFS”) debt securities
(amortized cost of $6,771,354, $6,891,522 and $9,783,180)
5,906,090
6,255,504
9,713,006
(5.6
)
(39.2
)
Held-to-maturity (“HTM”) debt securities,
at amortized cost (fair value of $2,459,135 and $2,656,549 in
2022)
3,012,667
3,028,302
—
(0.5
)
100.0
Loans held-for-sale (“HFS”)
14,500
28,464
—
(49.1
)
100.0
Loans held-for-investment (''HFI'') (net
of allowance for loan losses of $582,517, $563,270 and
$560,404)
46,859,738
45,938,806
39,921,301
2.0
17.4
Investments in qualified affordable
housing partnerships, tax credit and other investments, net
725,254
634,304
664,795
14.3
9.1
Goodwill
465,697
465,697
465,697
—
—
Operating lease right-of-use assets
105,411
107,588
99,785
(2.0
)
5.6
Other assets
1,799,822
1,898,062
1,790,321
(5.2
)
0.5
Total assets
$
62,576,061
$
62,394,283
$
60,959,110
0.3
%
2.7
%
Liabilities and Stockholders’
Equity
Deposits
$
53,857,362
$
54,343,354
$
53,356,190
(0.9
)%
0.9
%
Federal funds purchased
200,000
—
—
100.0
100.0
FHLB advances
324,920
174,776
248,898
85.9
30.5
Assets sold under repurchase agreements
(“repurchase agreements”)
611,785
611,785
300,000
—
103.9
Long-term debt and finance lease
liabilities
152,610
152,663
151,795
(0.0
)
0.5
Operating lease liabilities
113,477
115,387
107,107
(1.7
)
5.9
Accrued expenses and other liabilities
1,655,239
1,386,836
1,104,919
19.4
49.8
Total liabilities
56,915,393
56,784,801
55,268,909
0.2
3.0
Stockholders’ equity
5,660,668
5,609,482
5,690,201
0.9
(0.5
)
Total liabilities and stockholders’
equity
$
62,576,061
$
62,394,283
$
60,959,110
0.3
%
2.7
%
Book value per common share
$
40.17
$
39.81
$
40.10
0.9
%
0.2
%
Tangible equity (1) per common
share
$
36.80
$
36.44
$
36.75
1.0
0.1
Number of common shares at
period-end
140,918
140,917
141,884
0.0
(0.7
)
Tangible equity to tangible assets
ratio (1)
8.35
%
8.29
%
8.62
%
6
bps
(27
) bps
(1)
See reconciliation of GAAP to
non-GAAP financial measures in Table 13.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
TOTAL LOANS AND DEPOSITS
DETAIL
($ in thousands)
(unaudited)
Table 2
September 30, 2022 %
Change
September 30, 2022
June 30, 2022
September 30, 2021
Qtr-o-Qtr
Yr-o-Yr
Loans:
Commercial:
Commercial and industrial (“C&I”)
(1)
$
15,625,072
$
15,377,117
$
13,831,649
1.6
%
13.0
%
Commercial real estate (“CRE”):
CRE
13,573,157
13,566,748
11,818,065
—
14.9
Multifamily residential
4,559,302
4,443,704
3,340,378
2.6
36.5
Construction and land
556,894
515,857
376,921
8.0
47.7
Total CRE
18,689,353
18,526,309
15,535,364
0.9
20.3
Consumer:
Residential mortgage:
Single-family residential
10,855,345
10,234,473
9,021,801
6.1
20.3
Home equity lines of credit (“HELOCs”)
2,184,924
2,280,080
1,963,622
(4.2
)
11.3
Total residential mortgage
13,040,269
12,514,553
10,985,423
4.2
18.7
Other consumer
87,561
84,097
129,269
4.1
(32.3
)
Total loans HFI (2)
47,442,255
46,502,076
40,481,705
2.0
17.2
Loans HFS
14,500
28,464
—
(49.1
)
100.0
Total loans (2)
47,456,755
46,530,540
40,481,705
2.0
17.2
Allowance for loan losses
(582,517
)
(563,270
)
(560,404
)
3.4
3.9
Net loans (2)
$
46,874,238
$
45,967,270
$
39,921,301
2.0
17.4
Deposits:
Noninterest-bearing demand
$
21,645,394
$
23,028,831
$
23,175,471
(6.0
)%
(6.6
)%
Interest-bearing checking
6,822,343
7,094,726
6,530,601
(3.8
)
4.5
Money market
12,113,292
11,814,402
12,555,879
2.5
(3.5
)
Savings
2,917,770
3,027,819
2,855,597
(3.6
)
2.2
Time deposits
10,358,563
9,377,576
8,238,642
10.5
25.7
Total deposits
$
53,857,362
$
54,343,354
$
53,356,190
(0.9
)%
0.9
%
(1)
Includes $110.9 million, $153.3
million and $807.3 million of Paycheck Protection Program (“PPP”)
loans as of September 30, 2022, June 30, 2022 and September 30,
2021, respectively. Excluding PPP loans, total loans were $47.35
billion, $46.38 billion and $39.67 billion as of September 30,
2022, June 30, 2022 and September 30, 2021, respectively.
(2)
Includes $(60.3) million, $(56.2)
million and $(54.3) million of net deferred loan fees and net
unamortized premiums as of September 30, 2022, June 30, 2022 and
September 30, 2021, respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF INCOME
($ and shares in thousands,
except per share data)
(unaudited)
Table 3
Three Months Ended
September 30, 2022 %
Change
September 30, 2022
June 30, 2022
September 30, 2021
Qtr-o-Qtr
Yr-o-Yr
Interest and dividend income (1)
$
628,236
$
499,754
$
415,307
25.7
%
51.3
%
Interest expense
76,427
26,802
19,601
185.2
289.9
Net interest income before provision for
(reversal of) credit losses
551,809
472,952
395,706
16.7
39.4
Provision for (reversal of) credit
losses
27,000
13,500
(10,000
)
100.0
NM
Net interest income after provision for
(reversal of) credit losses
524,809
459,452
405,706
14.2
29.4
Noninterest income
75,552
78,444
73,109
(3.7
)
3.3
Noninterest expense
215,973
196,860
205,384
9.7
5.2
Income before income taxes
384,388
341,036
273,431
12.7
40.6
Income tax expense
89,049
82,707
47,982
7.7
85.6
Net income
$
295,339
$
258,329
$
225,449
14.3
%
31.0
%
Earnings per share (“EPS”)
- Basic
$
2.10
$
1.83
$
1.59
14.7
%
31.9
%
- Diluted
$
2.08
$
1.81
$
1.57
14.6
32.0
Weighted-average number of shares
outstanding
- Basic
140,917
141,429
141,880
(0.4
)%
(0.7
)%
- Diluted
142,011
142,372
143,143
(0.3
)
(0.8
)
Three Months Ended
September 30, 2022 %
Change
September 30, 2022
June 30, 2022
September 30, 2021
Qtr-o-Qtr
Yr-o-Yr
Noninterest income:
Lending fees
$
20,289
$
20,142
$
17,516
0.7
%
15.8
%
Deposit account fees
23,636
22,372
18,508
5.6
27.7
Interest rate contracts and other
derivative income
8,761
9,801
7,156
(10.6
)
22.4
Foreign exchange income
10,083
11,361
13,101
(11.2
)
(23.0
)
Wealth management fees
8,903
6,539
5,598
36.2
59.0
Net gains on sales of loans
2,129
917
3,329
132.2
(36.0
)
Gains on sales of AFS debt securities
—
28
354
(100.0
)
(100.0
)
Other investment (loss) income
(580
)
4,863
5,349
(111.9
)
(110.8
)
Other income
2,331
2,421
2,198
(3.7
)
6.1
Total noninterest income
$
75,552
$
78,444
$
73,109
(3.7
)%
3.3
%
Noninterest expense:
Compensation and employee benefits
$
127,580
$
113,364
$
105,751
12.5
%
20.6
%
Occupancy and equipment expense
15,920
15,469
15,851
2.9
0.4
Deposit insurance premiums and regulatory
assessments
4,875
4,927
4,641
(1.1
)
5.0
Deposit account expense
6,707
5,671
4,136
18.3
62.2
Data processing
3,725
3,486
3,575
6.9
4.2
Computer software expense
6,889
6,572
8,426
4.8
(18.2
)
Consulting expense
1,620
2,021
1,635
(19.8
)
(0.9
)
Legal expense
689
1,047
2,363
(34.2
)
(70.8
)
Other operating expense
28,094
29,324
20,998
(4.2
)
33.8
Amortization of tax credit and other
investments
19,874
14,979
38,008
32.7
(47.7
)
Total noninterest expense
$
215,973
$
196,860
$
205,384
9.7
%
5.2
%
NM - Not meaningful.
(1)
Includes $524 thousand, $1.4
million and $15.2 million of interest income related to PPP loans
for the three months ended September 30, 2022, June 30, 2022 and
September 30, 2021, respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF INCOME
($ and shares in thousands,
except per share data)
(unaudited)
Table 4
Nine Months Ended
September 30, 2022 %
Change
September 30, 2022
September 30, 2021
Yr-o-Yr
Interest and dividend income (1)
$
1,560,019
$
1,196,026
30.4
%
Interest expense
119,645
70,152
70.6
Net interest income before provision for
(reversal of) credit losses
1,440,374
1,125,874
27.9
Provision for (reversal of) credit
losses
48,500
(25,000
)
NM
Net interest income after provision for
(reversal of) credit losses
1,391,874
1,150,874
20.9
Noninterest income
233,739
214,406
9.0
Noninterest expense
602,283
585,984
2.8
Income before income taxes
1,023,330
779,296
31.3
Income tax expense
232,010
124,111
86.9
Net income
$
791,320
$
655,185
20.8
%
EPS
- Basic
$
5.59
$
4.62
21.1
%
- Diluted
$
5.55
$
4.58
21.2
Weighted-average number of shares
outstanding
- Basic
141,453
141,799
(0.2
)%
- Diluted
142,601
143,051
(0.3
)
Nine Months Ended
September 30, 2022 %
Change
September 30, 2022
September 30, 2021
Yr-o-Yr
Noninterest income:
Lending fees
$
59,869
$
56,965
5.1
%
Deposit account fees
66,323
51,233
29.5
Interest rate contracts and other
derivative income
29,695
20,981
41.5
Foreign exchange income
34,143
35,634
(4.2
)
Wealth management fees
21,494
20,460
5.1
Net gains on sales of loans
5,968
6,601
(9.6
)
Gains on sales of AFS debt securities
1,306
1,178
10.9
Other investment income
5,910
13,870
(57.4
)
Other income
9,031
7,484
20.7
Total noninterest income
$
233,739
$
214,406
9.0
%
Noninterest expense:
Compensation and employee benefits
$
357,213
$
318,985
12.0
%
Occupancy and equipment expense
46,853
47,150
(0.6
)
Deposit insurance premiums and regulatory
assessments
14,519
12,791
13.5
Deposit account expense
17,071
11,845
44.1
Data processing
10,876
12,088
(10.0
)
Computer software expense
20,755
23,106
(10.2
)
Consulting expense
5,474
4,978
10.0
Legal expense
2,454
5,840
(58.0
)
Other operating expense
78,315
58,544
33.8
Amortization of tax credit and other
investments
48,753
90,657
(46.2
)
Total noninterest expense
$
602,283
$
585,984
2.8
%
NM - Not meaningful.
(1)
Includes $7.0 million and $45.6
million of interest income related to PPP loans for the nine months
ended September 30, 2022 and 2021, respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED AVERAGE
BALANCES
($ in thousands)
(unaudited)
Table 5
Three Months Ended
September 30, 2022 %
Change
Nine Months Ended
September 30, 2022 %
Change
September 30, 2022
June 30, 2022
September 30, 2021
Qtr-o-Qtr
Yr-o-Yr
September 30, 2022
September 30, 2021
Yr-o-Yr
Loans:
Commercial:
C&I (1)
$
15,282,661
$
14,986,876
$
13,531,338
2.0
%
12.9
%
$
14,850,849
$
13,678,462
8.6
%
CRE:
CRE
13,533,482
13,049,058
11,747,607
3.7
15.2
12,958,562
11,564,946
12.1
Multifamily residential
4,531,351
4,112,411
3,248,281
10.2
39.5
4,133,975
3,139,209
31.7
Construction and land
532,800
475,933
415,812
11.9
28.1
467,731
480,514
(2.7
)
Total CRE
18,597,633
17,637,402
15,411,700
5.4
20.7
17,560,268
15,184,669
15.6
Consumer:
Residential mortgage:
Single-family residential
10,676,022
9,624,242
8,962,533
10.9
19.1
9,809,549
8,645,135
13.5
HELOCs
2,216,355
2,290,378
1,912,629
(3.2
)
15.9
2,230,060
1,793,928
24.3
Total residential mortgage
12,892,377
11,914,620
10,875,162
8.2
18.5
12,039,609
10,439,063
15.3
Other consumer
81,870
87,590
141,951
(6.5
)
(42.3
)
97,794
139,557
(29.9
)
Total loans (2)
$
46,854,541
$
44,626,488
$
39,960,151
5.0
%
17.3
%
$
44,548,520
$
39,441,751
12.9
%
Interest-earning assets
$
59,478,689
$
58,668,677
$
58,239,480
1.4
%
2.1
%
$
58,949,457
$
55,350,645
6.5
%
Total assets
$
63,079,444
$
62,232,841
$
61,359,533
1.4
%
2.8
%
$
62,361,618
$
58,263,002
7.0
%
Deposits:
Noninterest-bearing demand
$
22,423,633
$
23,887,452
$
23,169,323
(6.1
)%
(3.2
)%
$
23,244,247
$
20,345,370
14.2
%
Interest-bearing checking
6,879,632
6,712,890
6,646,515
2.5
3.5
6,747,710
6,571,231
2.7
Money market
12,351,571
12,319,930
12,604,827
0.3
(2.0
)
12,526,222
12,262,173
2.2
Savings
2,961,634
2,970,007
2,792,702
(0.3
)
6.0
2,954,098
2,715,114
8.8
Time deposits
9,435,063
8,239,571
8,283,265
14.5
13.9
8,596,728
8,635,249
(0.4
)
Total deposits
$
54,051,533
$
54,129,850
$
53,496,632
(0.1
)%
1.0
%
$
54,069,005
$
50,529,137
7.0
%
Interest-bearing liabilities
$
32,703,323
$
30,957,475
$
31,039,410
5.6
%
5.4
%
$
31,631,865
$
31,099,675
1.7
%
Stockholders’ equity
$
5,772,638
$
5,682,427
$
5,680,306
1.6
%
1.6
%
$
5,765,637
$
5,482,705
5.2
%
(1)
Average balances of PPP loans
were $127.6 million, $223.2 million and $1.11 billion for the three
months ended September 30, 2022, June 30, 2022 and September 30,
2021, respectively, and $252.8 million and $1.63 billion for the
nine months ended September 30, 2022 and 2021, respectively.
(2)
Includes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
QUARTER-TO-DATE AVERAGE
BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 6
Three Months Ended
September 30, 2022
June 30, 2022
Average
Average
Average
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with
banks
$
2,287,010
$
9,080
1.58
%
$
2,797,711
$
4,787
0.69
%
Resale agreements
1,037,292
6,769
2.59
%
1,641,723
8,553
2.09
%
AFS debt securities
6,204,729
38,383
2.45
%
6,503,677
33,438
2.06
%
HTM debt securities
3,017,063
12,709
1.67
%
3,021,239
12,738
1.69
%
Loans (2)
46,854,541
560,452
4.75
%
44,626,488
439,416
3.95
%
FHLB and FRB stock
78,054
843
4.28
%
77,839
822
4.24
%
Total interest-earning assets
59,478,689
628,236
4.19
%
58,668,677
499,754
3.42
%
Noninterest-earning assets:
Cash and due from banks
615,836
712,884
Allowance for loan losses
(566,369
)
(545,489
)
Other assets
3,551,288
3,396,769
Total assets
$
63,079,444
$
62,232,841
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
6,879,632
$
8,493
0.49
%
$
6,712,890
$
3,178
0.19
%
Money market deposits
12,351,571
33,101
1.06
%
12,319,930
8,892
0.29
%
Savings deposits
2,961,634
2,268
0.30
%
2,970,007
1,864
0.25
%
Time deposits
9,435,063
25,032
1.05
%
8,239,571
8,554
0.42
%
Federal funds purchased and other
short-term borrowings
211,794
1,177
2.20
%
64,145
241
1.51
%
FHLB advances
86,243
392
1.80
%
138,960
559
1.61
%
Repurchase agreements
624,821
4,421
2.81
%
359,778
2,418
2.70
%
Long-term debt and finance lease
liabilities
152,565
1,543
4.01
%
152,194
1,096
2.89
%
Total interest-bearing
liabilities
32,703,323
76,427
0.93
%
30,957,475
26,802
0.35
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
22,423,633
23,887,452
Accrued expenses and other liabilities
2,179,850
1,705,487
Stockholders’ equity
5,772,638
5,682,427
Total liabilities and stockholders’
equity
$
63,079,444
$
62,232,841
Interest rate spread
3.26
%
3.07
%
Net interest income and net interest
margin
$
551,809
3.68
%
$
472,952
3.23
%
(1)
Annualized.
(2)
Includes loans HFS. Average
balances of PPP loans were $127.6 million and $223.2 million for
the three months ended September 30, 2022 and June 30, 2022,
respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
QUARTER-TO-DATE AVERAGE
BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
Three Months Ended
September 30, 2022
September 30, 2021
Average
Average
Average
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with
banks
$
2,287,010
$
9,080
1.58
%
$
7,036,823
$
4,521
0.25
%
Resale agreements
1,037,292
6,769
2.59
%
2,382,741
8,957
1.49
%
AFS debt securities
6,204,729
38,383
2.45
%
8,782,682
37,826
1.71
%
HTM debt securities
3,017,063
12,709
1.67
%
—
—
—
%
Loans (2)
46,854,541
560,452
4.75
%
39,960,151
363,503
3.61
%
FHLB and FRB stock
78,054
843
4.28
%
77,083
500
2.57
%
Total interest-earning assets
59,478,689
628,236
4.19
%
58,239,480
415,307
2.83
%
Noninterest-earning assets:
Cash and due from banks
615,836
627,640
Allowance for loan losses
(566,369
)
(584,827
)
Other assets
3,551,288
3,077,240
Total assets
$
63,079,444
$
61,359,533
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
6,879,632
$
8,493
0.49
%
$
6,646,515
$
3,186
0.19
%
Money market deposits
12,351,571
33,101
1.06
%
12,604,827
3,446
0.11
%
Savings deposits
2,961,634
2,268
0.30
%
2,792,702
1,943
0.28
%
Time deposits
9,435,063
25,032
1.05
%
8,283,265
7,395
0.35
%
Federal funds purchased and other
short-term borrowings
211,794
1,177
2.20
%
620
—
—
%
FHLB advances
86,243
392
1.80
%
248,614
857
1.37
%
Repurchase agreements
624,821
4,421
2.81
%
310,997
2,012
2.57
%
Long-term debt and finance lease
liabilities
152,565
1,543
4.01
%
151,870
762
1.99
%
Total interest-bearing
liabilities
32,703,323
76,427
0.93
%
31,039,410
19,601
0.25
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
22,423,633
23,169,323
Accrued expenses and other liabilities
2,179,850
1,470,494
Stockholders’ equity
5,772,638
5,680,306
Total liabilities and stockholders’
equity
$
63,079,444
$
61,359,533
Interest rate spread
3.26
%
2.58
%
Net interest income and net interest
margin
$
551,809
3.68
%
$
395,706
2.70
%
(1)
Annualized.
(2)
Includes loans HFS. Average
balances of PPP loans were $127.6 million and $1.11 billion for the
three months ended September 30, 2022 and September 30, 2021,
respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES,
YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
Nine Months Ended
September 30, 2022
September 30, 2021
Average
Average
Average
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with
banks
$
3,175,596
$
17,127
0.72
%
$
6,078,982
$
11,781
0.26
%
Resale agreements
1,588,452
23,705
2.00
%
1,994,776
23,077
1.55
%
AFS debt securities
6,886,268
106,290
2.06
%
7,755,029
101,616
1.75
%
HTM debt securities
2,672,797
33,645
1.68
%
—
—
—
%
Loans (2)
44,548,520
1,376,978
4.13
%
39,441,751
1,057,964
3.59
%
FHLB and FRB stock
77,824
2,274
3.91
%
80,107
1,588
2.65
%
Total interest-earning assets
58,949,457
1,560,019
3.54
%
55,350,645
1,196,026
2.89
%
Noninterest-earning assets:
Cash and due from banks
656,772
602,830
Allowance for loan losses
(551,818
)
(603,523
)
Other assets
3,307,207
2,913,050
Total assets
$
62,361,618
$
58,263,002
Liabilities and Stockholders’
Equity
Interest-bearing liabilities:
Checking deposits
$
6,747,711
$
13,073
0.26
%
$
6,571,231
$
11,177
0.23
%
Money market deposits
12,526,222
45,196
0.48
%
12,262,173
11,869
0.13
%
Savings deposits
2,954,098
5,836
0.26
%
2,715,114
5,762
0.28
%
Time deposits
8,596,728
40,266
0.63
%
8,635,250
26,982
0.42
%
Federal funds purchased and other
short-term borrowings
93,370
1,427
2.04
%
1,871
42
3.00
%
FHLB advances
128,137
1,529
1.60
%
457,273
6,025
1.76
%
Repurchase agreements
433,340
8,855
2.73
%
304,745
5,981
2.62
%
Long-term debt and finance lease
liabilities
152,259
3,463
3.04
%
152,018
2,314
2.04
%
Total interest-bearing
liabilities
31,631,865
119,645
0.51
%
31,099,675
70,152
0.30
%
Noninterest-bearing liabilities and
stockholders’ equity:
Demand deposits
23,244,247
20,345,370
Accrued expenses and other liabilities
1,719,869
1,335,252
Stockholders’ equity
5,765,637
5,482,705
Total liabilities and stockholders’
equity
$
62,361,618
$
58,263,002
Interest rate spread
3.03
%
2.59
%
Net interest income and net interest
margin
$
1,440,374
3.27
%
$
1,125,874
2.72
%
(1)
Annualized.
(2)
Includes loans HFS. Average
balances of PPP loans were $252.8 million and $1.63 billion for the
nine months ended September 30, 2022 and 2021, respectively.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 9
Three Months Ended (1)
September 30, 2022
Basis Point Change
September 30, 2022
June 30, 2022
September 30, 2021
Qtr-o-Qtr
Yr-o-Yr
Return on average assets
1.86
%
1.66
%
1.46
%
20
bps
40
bps
Return on average equity
20.30
%
18.23
%
15.75
%
207
455
Tangible return on average tangible equity
(2)
22.16
%
19.94
%
17.25
%
222
491
Interest rate spread
3.26
%
3.07
%
2.58
%
19
68
Net interest margin
3.68
%
3.23
%
2.70
%
45
98
Average loan yield
4.75
%
3.95
%
3.61
%
80
114
Yield on average interest-earning
assets
4.19
%
3.42
%
2.83
%
77
136
Average cost of interest-bearing
deposits
0.86
%
0.30
%
0.21
%
56
65
Average cost of deposits
0.51
%
0.17
%
0.12
%
34
39
Average cost of funds
0.55
%
0.20
%
0.14
%
35
41
Adjusted pre-tax, pre-provision
profitability ratio (3)
2.72
%
2.38
%
1.95
%
34
77
Adjusted noninterest expense/average
assets (3)
1.23
%
1.17
%
1.08
%
6
15
Efficiency ratio
34.43
%
35.70
%
43.81
%
(127
)
(938
)
Adjusted efficiency ratio (3)
31.18
%
32.90
%
35.55
%
(172
) bps
(437
) bps
Nine Months Ended (1)
September 30, 2022
Basis Point Change
September 30, 2022
September 30, 2021
Yr-o-Yr
Return on average assets
1.70
%
1.50
%
20
bps
Return on average equity
18.35
%
15.98
%
237
Tangible return on average tangible equity
(2)
20.04
%
17.56
%
248
Interest rate spread
3.03
%
2.59
%
44
Net interest margin
3.27
%
2.72
%
55
Average loan yield
4.13
%
3.59
%
54
Yield on average interest-earning
assets
3.54
%
2.89
%
65
Average cost of interest-bearing
deposits
0.45
%
0.25
%
20
Average cost of deposits
0.26
%
0.15
%
11
Average cost of funds
0.29
%
0.18
%
11
Adjusted pre-tax, pre-provision
profitability ratio (3)
2.41
%
1.94
%
47
Adjusted noninterest expense/average
assets (3)
1.18
%
1.13
%
5
Efficiency ratio
35.98
%
43.72
%
(774
)
Adjusted efficiency ratio (3)
32.98
%
36.80
%
(382
) bps
(1)
Annualized except for efficiency
ratio.
(2)
See reconciliation of GAAP to
non-GAAP financial measures in Table 13.
(3)
See reconciliation of GAAP to
non-GAAP financial measures in Table 12.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
& OFF-BALANCE SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10
Three Months Ended September
30, 2022
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, June 30,
2022
$
363,282
$
173,479
$
25,060
$
1,449
$
563,270
Provision for credit losses on loans
(a)
9,575
11,163
6,281
255
27,274
Gross charge-offs
(6,894
)
(6,226
)
(775
)
(10
)
(13,905
)
Gross recoveries
7,172
71
21
—
7,264
Total net recoveries (charge-offs)
278
(6,155
)
(754
)
(10
)
(6,641
)
Foreign currency translation
adjustment
(1,386
)
—
—
—
(1,386
)
Allowance for loan losses, September
30, 2022
$
371,749
$
178,487
$
30,587
$
1,694
$
582,517
Three Months Ended June 30,
2022
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, March 31,
2022
$
339,446
$
182,296
$
21,958
$
1,985
$
545,685
Provision for (reversal of) credit losses
on loans
(a)
19,030
(9,181
)
3,122
(502
)
12,469
Gross charge-offs
(240
)
(679
)
(193
)
(34
)
(1,146
)
Gross recoveries
6,514
1,043
173
—
7,730
Total net recoveries (charge-offs)
6,274
364
(20
)
(34
)
6,584
Foreign currency translation
adjustment
(1,468
)
—
—
—
(1,468
)
Allowance for loan losses, June 30,
2022
$
363,282
$
173,479
$
25,060
$
1,449
$
563,270
Three Months Ended September
30, 2021
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, June 30,
2021
$
362,528
$
199,530
$
19,468
$
4,198
$
585,724
(Reversal of) provision for credit losses
on loans
(a)
(23,364
)
8,527
2,972
130
(11,735
)
Gross charge-offs
(1,154
)
(16,903
)
(912
)
(10
)
(18,979
)
Gross recoveries
4,203
1,106
156
—
5,465
Total net recoveries (charge-offs)
3,049
(15,797
)
(756
)
(10
)
(13,514
)
Foreign currency translation
adjustment
(71
)
—
—
—
(71
)
Allowance for loan losses, September
30, 2021
$
342,142
$
192,260
$
21,684
$
4,318
$
560,404
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
& OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10 (continued)
Nine Months Ended September
30, 2022
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, December 31,
2021
$
338,252
$
180,808
$
20,595
$
1,924
$
541,579
Provision for (reversal of) credit losses
on loans
(a)
37,867
3,640
10,628
(140
)
51,995
Gross charge-offs
(18,322
)
(7,304
)
(968
)
(90
)
(26,684
)
Gross recoveries
16,688
1,343
332
—
18,363
Total net charge-offs
(1,634
)
(5,961
)
(636
)
(90
)
(8,321
)
Foreign currency translation
adjustment
(2,736
)
—
—
—
(2,736
)
Allowance for loan losses, September
30, 2022
$
371,749
$
178,487
$
30,587
$
1,694
$
582,517
Nine Months Ended September
30, 2021
Commercial
Consumer
C&I
Total CRE
Total Residential
Mortgage
Other Consumer
Total
Allowance for loan losses, December 31,
2020
$
398,040
$
201,603
$
18,210
$
2,130
$
619,983
(Reversal of) provision for credit losses
on loans
(a)
(42,127
)
16,198
4,229
2,226
(19,474
)
Gross charge-offs
(20,162
)
(28,642
)
(1,091
)
(43
)
(49,938
)
Gross recoveries
6,301
3,101
336
5
9,743
Total net charge-offs
(13,861
)
(25,541
)
(755
)
(38
)
(40,195
)
Foreign currency translation
adjustment
90
—
—
—
90
Allowance for loan losses, September
30, 2021
$
342,142
$
192,260
$
21,684
$
4,318
$
560,404
Three Months Ended
Nine Months Ended
September 30, 2022
June 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
Unfunded Credit Facilities
Allowance for unfunded credit
commitments, beginning of period (1)
$
24,304
$
23,262
$
26,300
$
27,514
$
33,577
(Reversal of) provision for credit losses
on unfunded credit commitments
(b)
(274
)
1,031
1,735
(3,495
)
(5,526
)
Foreign currency translation
adjustment
11
11
1
22
(15
)
Allowance for unfunded credit
commitments, end of period (1)
$
24,041
$
24,304
$
28,036
$
24,041
$
28,036
Provision for (reversal of) credit
losses
(a)+(b)
$
27,000
$
13,500
$
(10,000
)
$
48,500
$
(25,000
)
(1)
Included in Accrued expenses and
other liabilities on the Condensed Consolidated Balance Sheet.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
CRITICIZED LOANS,
NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS
($ in thousands)
(unaudited)
Table 11
Criticized Loans
September 30, 2022
June 30, 2022
September 30, 2021
Special mention loans
$
470,964
$
590,227
$
448,497
Classified loans
434,242
432,414
561,787
Total criticized loans (1)
$
905,206
$
1,022,641
$
1,010,284
Nonperforming Assets
September 30, 2022
June 30, 2022
September 30, 2021
Nonaccrual loans:
Commercial:
C&I
$
47,988
$
40,053
$
97,157
Total CRE
11,209
12,742
15,359
Consumer:
Total residential mortgage
23,309
37,129
18,153
Other consumer
37
11
2,491
Total nonaccrual loans
82,543
89,935
133,160
Other real estate owned, net
—
—
28,800
Other nonperforming assets
—
—
10,681
Nonperforming loans HFS
14,500
—
—
Total nonperforming assets
$
97,043
$
89,935
$
172,641
Credit Quality Ratios
September 30, 2022
June 30, 2022
September 30, 2021
Annualized quarterly net charge-offs
(recoveries) to average loans HFI
0.06
%
(0.06
)%
0.13
%
Special mention loans to loans HFI
0.99
%
1.27
%
1.11
%
Classified loans to loans HFI
0.92
%
0.93
%
1.39
%
Criticized loans to loans HFI
1.91
%
2.20
%
2.50
%
Nonperforming assets to total assets
0.16
%
0.14
%
0.28
%
Nonaccrual loans to loans HFI
0.17
%
0.19
%
0.33
%
Allowance for loan losses to loans HFI
1.23
%
1.21
%
1.38
%
(1)
Excludes loans HFS.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ in thousands)
(unaudited)
Table 12
The Company uses certain non-GAAP
financial measures to provide supplemental information regarding
the Company’s performance. Adjusted efficiency ratio represents
adjusted noninterest expense divided by revenue. Adjusted pre-tax,
pre-provision profitability ratio represents total revenue less
adjusted noninterest expense, divided by average total assets.
Adjusted noninterest expense excludes the amortization of tax
credit and other investments and the amortization of core deposit
intangibles. Management believes that the measures and ratios
presented below provide clarity to financial statement users
regarding the ongoing performance of the Company and allow
comparability to prior periods.
Three Months Ended
September 30, 2022
June 30, 2022
September 30, 2021
Net interest income before provision for
(reversal of) credit losses
$
551,809
$
472,952
$
395,706
Total noninterest income
75,552
78,444
73,109
Total revenue
(a)
$
627,361
$
551,396
$
468,815
Total noninterest expense
(b)
$
215,973
$
196,860
$
205,384
Less: Amortization of tax credit and other
investments
(19,874
)
(14,979
)
(38,008
)
Amortization of core deposit
intangibles
(485
)
(488
)
(705
)
Adjusted noninterest expense
(c)
$
195,614
$
181,393
$
166,671
Efficiency ratio
(b)/(a)
34.43
%
35.70
%
43.81
%
Adjusted efficiency ratio
(c)/(a)
31.18
%
32.90
%
35.55
%
Adjusted pre-tax, pre-provision
income
(a)-(c) = (d)
$
431,747
$
370,003
$
302,144
Average total assets
(e)
$
63,079,444
$
62,232,841
$
61,359,533
Adjusted pre-tax, pre-provision
profitability ratio (1)
(d)/(e)
2.72
%
2.38
%
1.95
%
Adjusted noninterest expense/average
assets (1)
(c)/(e)
1.23
%
1.17
%
1.08
%
Nine Months Ended
September 30, 2022
September 30, 2021
Net interest income before provision for
(reversal of) credit losses
$
1,440,374
$
1,125,874
Total noninterest income
233,739
214,406
Total revenue
(f)
$
1,674,113
$
1,340,280
Total noninterest expense
(g)
$
602,283
$
585,984
Less: Amortization of tax credit and other
investments
(48,753
)
(90,657
)
Amortization of core deposit
intangibles
(1,484
)
(2,147
)
Adjusted noninterest expense
(h)
$
552,046
$
493,180
Efficiency ratio
(g)/(f)
35.98
%
43.72
%
Adjusted efficiency ratio
(h)/(f)
32.98
%
36.80
%
Adjusted pre-tax, pre-provision
income
(f)-(h) = (i)
$
1,122,067
$
847,100
Average total assets
(j)
$
62,361,618
$
58,263,002
Adjusted pre-tax, pre-provision
profitability ratio (1)
(i)/(j)
2.41
%
1.94
%
Adjusted noninterest expense/average
assets (1)
(h)/(j)
1.18
%
1.13
%
(1)
Annualized.
EAST WEST BANCORP, INC. AND
SUBSIDIARIES
GAAP TO NON-GAAP
RECONCILIATION
($ in thousands)
(unaudited)
Table 13
The Company uses certain non-GAAP
financial measures to provide supplemental information regarding
the Company’s performance. Tangible equity and tangible equity to
tangible assets ratio are non-GAAP financial measures. Tangible
equity and tangible assets represent stockholders’ equity and total
assets, respectively, which have been reduced by goodwill and other
intangible assets. Given that the use of such measures and ratios
is more prevalent in the banking industry, and such measures and
ratios are used by banking regulators and analysts, the Company has
included them below for discussion.
September 30, 2022
June 30, 2022
September 30, 2021
Stockholders’ equity
(a)
$
5,660,668
$
5,609,482
$
5,690,201
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(8,667
)
(8,537
)
(9,849
)
Tangible equity
(b)
$
5,186,304
$
5,135,248
$
5,214,655
Total assets
(c)
$
62,576,061
$
62,394,283
$
60,959,110
Less: Goodwill
(465,697
)
(465,697
)
(465,697
)
Other intangible assets (1)
(8,667
)
(8,537
)
(9,849
)
Tangible assets
(d)
$
62,101,697
$
61,920,049
$
60,483,564
Total stockholders’ equity to total
assets ratio
(a)/(c)
9.05
%
8.99
%
9.33
%
Tangible equity to tangible assets
ratio
(b)/(d)
8.35
%
8.29
%
8.62
%
Tangible return on average tangible equity
represents tangible net income divided by average tangible equity.
Tangible net income excludes the after-tax impacts of the
amortization of core deposit intangibles and mortgage servicing
assets. Given that the use of such measures and ratios is more
prevalent in the banking industry, and such measures and ratios are
used by banking regulators and analysts, the Company has included
them below for discussion.
Three Months Ended
Nine Months Ended
September 30, 2022
June 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
Net income
(e)
$
295,339
$
258,329
$
225,449
$
791,320
$
655,185
Add: Amortization of core deposit
intangibles
485
488
705
1,484
2,147
Amortization of mortgage servicing
assets
340
364
430
1,096
1,264
Tax effect of amortization adjustments
(2)
(237
)
(245
)
(322
)
(742
)
(968
)
Tangible net income
(f)
$
295,927
$
258,936
$
226,262
$
793,158
$
657,628
Average stockholders’ equity
(g)
$
5,772,638
$
5,682,427
$
5,680,306
$
5,765,637
$
5,482,705
Less: Average goodwill
(465,697
)
(465,697
)
(465,697
)
(465,697
)
(465,697
)
Average other intangible assets (1)
(8,379
)
(8,827
)
(10,135
)
(8,801
)
(10,847
)
Average tangible equity
(h)
$
5,298,562
$
5,207,903
$
5,204,474
$
5,291,139
$
5,006,161
Return on average equity (3)
(e)/(g)
20.30
%
18.23
%
15.75
%
18.35
%
15.98
%
Tangible return on average tangible
equity (3)
(f)/(h)
22.16
%
19.94
%
17.25
%
20.04
%
17.56
%
(1)
Includes core deposit intangibles
and mortgage servicing assets.
(2)
Applied statutory tax rate of
28.77% for the three and nine months ended September 30, 2022, and
the three months ended June 30, 2022. Applied statutory tax rate of
28.37% for the three and nine months ended September 30, 2021.
(3)
Annualized.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221020005010/en/
FOR INVESTOR INQUIRIES, CONTACT: Irene Oh Chief Financial
Officer T: (626) 768-6360 E: irene.oh@eastwestbank.com
Julianna Balicka Director of Investor Relations and Corporate
Finance T: (626) 768-6985 E: julianna.balicka@eastwestbank.com
East West Bancorp (NASDAQ:EWBC)
Historical Stock Chart
From Mar 2024 to Apr 2024
East West Bancorp (NASDAQ:EWBC)
Historical Stock Chart
From Apr 2023 to Apr 2024
